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Chrysler: Old dogs, even back then

The last time Chrysler found itself in deep peril, in the mid-1980s, Lee Iacocca hired turnaround artist Steve Miller to jump-start the company.

Miller recounts meeting a Japanese-American, Reiko McKendry, who wanted to help defuse anti-Japanese sentiment in America and make Chrysler competitive again. Miller hired her and watched as she assembled a team of newcomers who worked furiously to discover what Honda was doing to beat U.S. automakers.

McKendry’s group found cross-disciplinary teams at Honda that worked continuously in big, open spaces, drawing heavily on fieldwork to observe how customers actually used and wanted to use their cars.

Detroit, by contrast, had designers working in isolation on dream cars, with input only from small focus groups. When these beautiful but nonfunctional designs went to engineering and manufacturing, the process turned into a quagmire of change orders and patches. Marketing came last, too late to alter hard-to-sell cars.

McKendry’s team saw how Honda’s system could improve quality and cut costs. Slowly, the study made its way up the ranks to Iacocca. For a while, talk flourished of open management.

Iacocca arrived and ordered a change to the new way, whereupon everybody reverted to the old way.

Why? Miller thinks Iacocca, even in giving his assent, did it in the old command-and-control style, showing everyone that he didn’t really have the stomach for change.

Bottom line: Wait until you’re in extremis, and it’s that much harder to recover.

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